ACCT5931 2024 Term 1: Seminar 8 Video Blog

Australia’s black summer bushfires ripped billions from the tourism
industry. Is global warming making the cost of natural disasters worse?
By Graeme Readfearn
Wed 31 Jan 2024
Source: The Guardian (adapted)
As Australia headed into the summer of late 2019, Craig Wickham’s tour company
Exceptional Kangaroo Island was doing better than ever. Founded in 1990, it was on track to hit $3m
in annual revenue for the first time. “It was as good as the business had ever been,” Wickham says. “We
were flying.”

Instead, by early 2020, more than a third of Kangaroo Island, off the South Australian coast, was up in
flames as what became known as Australia’s black summer bushfires tore through forests around the
country. Wickham, a volunteer firefighter, closed the business for eight days. The cancellations from
Europe, the US and Canada started rolling in.

“We lost about half a million dollars in the first week,” Wickham says. There were big parts of the
spectacular island unaffected but many tourists still cancelled months in advance.
A new study published on Wednesday from the University of Sydney estimates the black summer
bushfires impacts on tourism ripped $2.8bn almost instantly from the country’s economy. The study
also accounted for the knock-on effects to the economy through the tourism supply chain, rather than
just the loss of revenue.
Wickham’s business, for example, pays bills to almost 200 different companies or sole traders in the
course of a year.
“That’s why it’s important that we look at the entire supply chain,” says Vivienne Reiner, a researcher
at the university’s Integrated Sustainability Analysis centre, who led the study. Reiner says the impacts
on tourism were widespread and seen even in areas relatively unaffected by the fires. And the study’s
findings only show the cost to one part of the Australian economy.
Dr Karl Mallon, the chief executive of Climate Risk Group that analyses the costs and risks from global
heating, says global warming is making hidden costs from natural disasters worse. He points to the
health costs of inhaling bushfire smoke, the mental health toll, the inflation in rebuild costs due to
demand for labour and materials; and the loss of jobs when businesses close up for good and how that
cascades through the supply chain. One of Mallon’s biggest concerns is if insurers in Australia follow
the lead of insurers in the US, where the risk of wildfire and rising rebuild costs is seeing insurers
refusing to write policies in California.
Senator Jenny McAllister, the assistant minister for climate change and energy, says for Australians
experiencing extreme weather “the impacts can be devastating and long lasting”. “We know last year
was the hottest year on record, and that despite the ongoing international efforts to reduce emissions,
some impacts of climate change are now unavoidable.”
Back on Kangaroo Island, Wickham says his own business has come through the fires and the pandemic
well, while other tourism operators packed up or sold out. But he also sees a tension in his industry.
“From an international travel perspective, there’s tension between long-haul flights and carbon
footprints, so we have to find ways to change what we do. The more successful we are internationally,
the more problems we potentially create for ourselves unless we can decarbonise”
Reflection Prompt: Identify and discuss the key material sustainability issue faced by “Exceptional
Kangaroo Island Tours Company” and how this issue potentially affects three (3) stakeholder groups
and the Tour Company’s business strategy.

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